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BA lands regional airline for pounds 78m.

Byline: Shahid Naqvi Business Staff

British Airways said yesterday it would take over British Regional Air Lines for pounds 78 million in a bid to improve its struggling short-haul European operations.

BA, Europe's largest airline, said the deal, which values the group at 120p a share in cash, was a 'great opportunity' to improve regional flying.

BRAL declined to discuss what cost savings it planned to make through the deal, but stressed it did not foresee any job losses or reduction in services.

The offer has been irrevocably approved by 53.3 per cent of the shareholders in BRAL, which is 26.2 per cent owned by Sir Michael Bishop, chairman of rival airline British Midland.

BRAL was floated off by British Midland in 1998.

The group, which employs 1,300 staff and has a total fleet of 50 aircraft, is to be integrated into a single operation with BA's profit-making West Country-based subsidiary, Brymon Airways.

The purchase is a further step in British Airways' effort to create a more efficiently co-ordinated service in its short-haul businesses and reduce fragmentation among subsidiary and franchise partners.

It is also part of a strategy to focus on profitable market sectors, operating smaller aircraft at higher frequencies with a more profitable mix of passengers.

'This deal is a great opportunity for us further to improve regional flying - better matching capacity to demand and more closely integrating the regional networks to give the customer a better, more cohesive schedule,' said BA's chief executive, Rod Eddington.

BRAL's British Regional Airlines aircraft fly to destinations in the British Isles and Continental Europe, while Manx Airlines flies between the Isle of Man and the UK, Channel Islands and Ireland.

The company's board intends unanimously to recommend shareholders to accept the offer.

Though the takeover is subject to formal approval by the Office of Fair Trading, BA does not envisage any regulatory problems.

'We expect to have an indication from them some time in April,' Roger Maynard, BA director of investments and joint ventures said.

Mr Maynard stressed the importance of the regional market to BA's and underlined the group's intention to retain all existing aircraft and jobs.

'The regions are a very important area of BA's strategy - it's our home market and we cannot ignore it,' he said.

Yesterday's offer comes three months after BRAL revealed it was in takeover talks.

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Rod Eddington
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Title Annotation:Business
Publication:The Birmingham Post (England)
Date:Mar 9, 2001
Words:398
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